Rajnish Wellness BSE RI review - (Avoid)

•    The company is engaged in marketing of pharmaceutical products, consumer durables etc.
•    It fully depends on third party supply for its products.
•    It has ventured in to online marketing of pharma and personal care products that includes sexual wellness.
•    It posted listless financial performances for the FY23 and FY24 with minuscule earnings.
•    It is bringing this RI with the financial statements only up to September 30, 2024, that raise eyebrows.
•    There is no harm in skipping this at par, but risky offer.

PREFACE:
The company is coming out with its RI of Rs. 48.67 cr. at par value and it is opening for subscription on July 10, 2025. Its offer document was uploaded on BSE Web only on July 09, 2025 noon though it is dated May 31, 2025, and the record date for eligibility was June 03, 2025. Reason for this inordinate delay is better known to the management and the designated exchange. The company came with its maiden IPO of Rs. 11.98 cr. at a price of Rs. 95 per share of Rs. 10 each in June 2018. Navigant Corporate Advisors Ltd. was the lead manager and Monarch Networth Capital Ltd. was the market maker for the company by then. The company has followed a gimmicks of issuing bonus shares and splitting since listing.

ABOUT COMPANY:
Rajnish Wellness Ltd. (RWL) is currently engaged in the business of selling various products in the categories ranging from pharmaceutical products, consumer durables to ayurvedic personal care products. Company’s major focus area is pharmaceutical, sexual wellness, energy revitalization and personal care products. Changing lifestyle and awareness of health and wellness leads to increase in demand for sexual wellness and energy revitalization products. 

Its Current product portfolio is concentrated on pharma and ayurvedic products. The Company having foreseen the business opportunities and rapid increase in the number of people using internet as a platform for buying their medicines and other healthcare and personal care products RWL came up with an idea of ‘DAVA DISCOUNT’. The Company has started with the franchise model under the brand name “DAVA DISCOUNT”. ‘Dava Discount’ is supplying all the pharmaceutical products throughout the country with its Dava Discount franchisee. 

Its business objective is to provide all branded medicines at a discounted/reasonable/competitive price for public at large. To expand the franchise model the Company has entered into multiple franchise agreement across India. It also continues to have a tie up with various e-commerce websites like snapdeal.com, indiamart.com, clickoncare.com, lovenaturalremedies.com, ayurvedmart.com and fineyog.com etc. to sell the products. Also, it has established a pharma centric platform of ‘Dava Discount’ to focus more on this model i.e., https://davadiscount.com/.

The Company has a PAN India presence. It runs on asset light model and owns all the brands under its name. It is sourcing all products from dedicated manufacturers since inception. The Company has outsourced all its manufacturing needs to various suppliers who are expert in particular product in India which enables company to adhere to the required specifications and quality in stipulated time. It has entered into several franchise across India and has also received in principal approval from Eastern Railways for setting up business centers at 500 plus stations across Tier I, II and III cities. The Company has a presence in over 21 states with over 500 super Stuckists and 10000 distributors having presence in more than 100,000 medical stores pan India. Surprisingly it has given its human resources data of 19 employees on its payroll and additional 28 contract workers as of March 31, 2024.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its Rights Issue (RI) of 486700618 equity shares of Re. 1 each at par value to mobilize Rs. 48.67 cr. The issue opens for subscription on July 10, 2025, and will close on August 08, 2025. The company is asking full money on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is offering RI in the ratio of 19 for 30 to its eligible stakeholders as of the record date of June 03, 2025. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 43.75 cr. for working capital, Rs. 1.39 cr. for takeover of sole proprietorship firm (Milan Trading Co.), and Rs. 2.78 cr. for general corporate purposes.

The RI is solely lead managed by the company itself, and Bigshare Services Pvt. Ltd., is the registrar to the issue. 

Post-IPO, company’s current paid-up equity capital of Rs. 76.85 cr. will stand enhanced to Rs. 125.52 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 125.52 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 27.62 cr. / Rs. 0.46 cr. (FY23), Rs. 76.69 cr. / Rs. 1.03 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 0.45 cr. on a total income of Rs. 34.07 cr.  It is highly surprising that the company is going for this RI issue with its financial statements only up to September 30, 2024. Its minuscule earnings may pose servicing issue on enhanced equity base post RI. NAV as of March 2024, stood at 0.11 per share and it raises alarm. The company is operating in a highly competitive and fragmented segment. It has few litigations on tax demand that raise concern.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has not declared any dividends for the reported periods. It will adopt a prudent dividend policy based on its financial performances and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 541601 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 0.95 on June 02, 2025, and opened on an ex-right basis at Rs. 0.95 on June 03, 2025. Since then, it has marked a high/low of Rs. 0.99 / Rs. 0.84. The scrip last closed at Rs. 0.92 as of July 09, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 5.23 / Rs. 0.83. The counter is currently under ESM: Stage 1.

The promoters’ holding has declined to 7.41% for the last two quarters ended with March 31, 2025, against 16.24% as of September 30, 2024. The counter is currently trading at a discount, i.e., below its par value. The counter is operated by vested interest parties.